World Bank Warns Middle East Conflict Could Weaken Global Growth as Commodity Prices Surge

The World Bank has warned that the ongoing conflict in the Middle East could slow global economic growth, raise inflation, and push commodity prices sharply higher. The warning comes as energy markets face serious pressure from supply disruptions, shipping risks, and rising uncertainty around key trade routes.

According to the World Bank’s latest commodity outlook, energy prices are expected to rise by about 24% in 2026, reaching their highest level since the shock caused by Russia’s invasion of Ukraine in 2022. Overall commodity prices are also projected to climb as oil, natural gas, fertilizers, metals, and food-related inputs become more expensive.

Oil Prices Remain the Biggest Concern

The report highlights oil as the most important risk. Brent crude is forecast to average around $86 per barrel in 2026, but the World Bank warned prices could rise much higher if the conflict continues or if supply routes face further disruption. Some scenarios suggest oil could climb toward $115 per barrel if damage to energy infrastructure worsens.

A major concern is the Strait of Hormuz, one of the world’s most important shipping routes for oil and gas. Any long-term disruption there could affect supplies to Asia, Europe, and other major markets. Higher oil prices would quickly raise transport, electricity, manufacturing, and food costs.

Developing Countries Could Be Hit Hardest

The World Bank said poorer and developing economies are likely to suffer the most. These countries often spend a larger share of income on food, fuel, and imports. When energy and fertilizer prices rise, food production becomes more expensive, and families may face higher prices for basic goods.

The bank projects growth in developing economies could slow to about 3.6%, while inflation could rise to around 5.1%. That means governments may have less room to support households, create jobs, or invest in schools, roads, and healthcare.

Fertilizer and Food Prices May Rise

The conflict is also affecting fertilizer markets. Urea prices are expected to rise sharply, and fertilizer prices overall could increase by about 31%. This matters because farmers depend on fertilizers to grow crops efficiently. If fertilizers become too costly, crop yields may fall, and food prices may rise further.

Food-importing countries may face the greatest pressure. Higher energy prices increase the cost of shipping food, while higher fertilizer prices raise the cost of producing it. Together, these pressures could make food security worse in vulnerable regions.

Inflation Pressure Could Return

The World Bank warned that rising commodity prices could make inflation harder to control. Many central banks have spent the past few years trying to bring inflation down. A fresh energy shock could force them to keep interest rates higher for longer.

Higher interest rates can reduce borrowing and investment. Businesses may delay expansion, consumers may spend less, and governments with high debt may face larger repayment costs. This could create a difficult cycle: higher prices, slower growth, and tighter financial conditions.

Global Markets Face More Uncertainty

The report shows that the Middle East conflict is no longer only a regional issue. It is now a major global economic risk. Energy, food, fertilizer, and metals markets are closely connected, so disruption in one area can spread quickly across the world.

For households, the impact may appear through higher fuel bills, more expensive groceries, and slower job growth. For governments, the challenge will be balancing inflation control with support for people most affected by rising costs.

Conclusion

The World Bank’s message is clear: if the Middle East conflict continues or expands, the global economy could face another major commodity shock. Oil and energy prices are the center of the risk, but the effects could spread to food, fertilizer, inflation, and economic growth.

The countries most exposed are developing and low-income economies, where families already spend much of their income on basic needs. Unless supply routes stabilize and commodity markets calm down, the world may face a period of higher prices and weaker growth.

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